Optus the catalyst for ADSL2 adoption

The arrival of Optus ADSL2 will kick-off the critical mass needed to get the ADSL2 ball rolling, according to the chairman of the Service Providers Association (SPAN), John Kranenburg.

"There is no doubt that the Optus move into the ADSL2 space will bring consumer confidence and momentum into the market," he said. "To establish national markets you need national mass and Optus has the penetration to do this."

Optus entered the ADSL2 market at the end of March on the back of its $150 million rollout of ADSL2 hardware, which has so far reached 100 metropolitan telephone exchanges. Over the next 12 months, this will extend to 340 exchanges and cover 2.9 million households, Optus said. The ADSL2 broadband network will offer speeds of up to 20Mbps.

Although 340 exchanges may seem paltry in comparison to Telstra's available exchanges and even iiNet and Internode's potential exchange capabilities, Kranenburg said comparing numbers was trivial.

"You can hit the largest proportion of the Australian public with 450 exchanges so one shouldn't underestimate the coverage you could get with 300 plus exchanges," he said.

Despite current ADSL2 offerings with comparable speeds from iiNet and Internode since December last year, Kranenburg believes that mass national acceptance of ADSL2 would not be achieved until a national player entered the market.

"iiNnet and Internode have done a great job in seeding the market with the ADSL2 service but the reality is that those two companies are not market movers," he said. "If you want real market momentum into ADSL2, you need a national player such as Optus or Telstra."

Telecommunications analyst, Paul Budde, agreed with Kranenburg's sentiments but added that Optus only commands a 10 per cent share in the current market as the DSLAM market has given equal market power to companies such as iiNET and iPrimus.

"Optus still has to cannibalise some of its 'old' business, while for most of the others it is all new business," he said. "Over the last two years the other players have been far more aggressive than Optus in broadband, so now Optus has to start fighting from the back," he said.

However, Kranenburg added that even if Telstra would not enter the market, the presence of Optus would be enough to influence momentum and increase ADSL2 conversion rates simply because people see the telco as a credible player.

"It's a relative issue. Adoption will increase quickly and if Telstra join in, it will grow even quicker. Once national mass is achieved, the other players will start benefiting."

Kranenburg also said a surge in ADSL2 uptake would create new revenue streams through value added services. He said businesses should focus on the combination of communications with the integration of customer premises to deliver value transactions to consumers.

"That's where the growth area is and it's where you achieve innovation," he said. "It's not just about connecting technologies; it's about doing it in a way that gives you a jump over your competitors."

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